Confounding Stock: Fortuna Silver Mines Inc. (NYSE: FSM)

On 23 Jan 2020, Fortuna Silver Mines Inc. (NYSE: FSM) spotted trading -14.85% off 52-week high price. On the other end, the stock has been noted 63.60% away from the low price over the last 52-weeks. The stock changed -2.98% to recent value of $3.91. The stock transacted 1722852 shares during most recent day however it has an average volume of 2172.18K shares. The company has 160.29M of outstanding shares and 150.7M shares were floated in the market.

Fortuna Silver Mines Inc. (FSM) recently stated a net loss of $7.7M, adjusted net income of $1.9M, and adjusted EBITDA of $19.2M for the third quarter of 2019.

Overview of financial and operating results

The Company’s financial results for the quarter were influenced by an $8.3M foreign exchange loss related to the VAT construction receivable in Argentina resulting in a net loss of $7.7M.  After adjusting for non-cash and non-recurring items, the adjusted net income for the quarter was $1.9M contrast to $9.6M in Q3 2018 and $7.2M in Q2 2019.  The lower adjusted net income in the context of higher precious metal prices was mostly as a result of lower silver and gold metal production of 13% and 9%, respectively, contrast to Q3 2018 that prevented us from realizing the full benefit of rising metal prices in the quarter.  The lower metal output was related to mine production sequencing at the San Jose Mine in the quarter.  Management expects production in the fourth quarter to be aligned with the mine plan and management continues to confirm production guidance for the year.

Compounding the effect of lower production, cash costs at San Jose were slightly above the high end of our yearly cash cost guidance range and 5% above for Caylloma.  Contrast to Q3 2018 cash cost per tonne at San Jose and Caylloma were 11% and 5% higher, respectively.  Although some components of the higher costs are of a non-recurring nature, management anticipates costs in Q4 to remain at the high end of our yearlycash cost guidance.

Capital resources and liquidity

Total liquidity accessible to the Company as of September 30, 2019 was $112.2M, which includes $40.0M of accessible credit under our $150.0M credit facility.  At the end of the quarter, the Company had cash, cash equivalents, and short-term investments of $72.2M (December 31, 2018 – $163.3M), a decrease of $91.1M since the startning of the year.  The decrease reflects the increased spending on construction of the Lindero project.

Subsequent to the end of the quarter, the Company closed a bought deal public offering of senior subordinated, unsecured convertible debentures which raised aggregate gross proceeds of $46M.

Lindero gold Project

Construction at the Lindero open pit heap leach gold mine located in Salta Province; Argentina is 81% complete as of the end of October 2019.  Net construction spending for the third quarter of 2019 was $37.6M (YTD spending – $131.0M) of which $27.0M was unpaid as of the end of September.  Cumulative construction spending to date was $253.8M, including advances to contractors, representing 85% of the total predictable construction costs.  The total cost of construction is predictable to be $298.0M.  In addition, the Company expects to incur about $25.0M of pre-production costs and working capital at Lindero and about $12.0M of recoverable value added taxes through to the end of construction.

The price moved ahead of -0.37% from the mean of 20 days, 10.83% from mean of 50 days SMA and performed 17.95% from mean of 200 days price. Company’s performance for the week was 1.03%, 16.37% for month and YTD performance remained -4.17%.


Willard Shelton

Willard Shelton – Technology My name is Willard Shelton, I have worked for the stock market industry for 4 years. Technology news grasp my attention the most. In early days, I started my journey with an ordinary author. Moving forward with great hard work and passion I achieve a higher position. As I believe in working hard and putting the soul in my work, I have accomplished so much success and place in, and now I have confidence in this, that I am the spin of this network. I have a vision of touching the sky. I wish to see this industry on a global scale one day. My other duties are that I am a contributor and an editor of the technology segment. My work is to do a critical analysis of companies and pick out the most significant information for investor network.

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